Tuesday, August 13, 2013

The Hyperloop As A Potential Disruptive Innovation

Yesterday, Elon Musk- the entrepreneur behind SpaceX, Paypal, and Tesla Motors-  unveiled his latest endeavor proposal...... the hyperloop transportation system. Musk goes on to describe his idea as a potential fifth form of transportation, a good synopsis of which can be found at Geekosystem. If anything, the concept art look slick.

Musk's proposal (and if you want to review all the technical details, it can be found here) got me thinking in terms of disruptive innovation. The idea as proposed, and I am taking Musk's assumptions at face value, would in many ways be a new market entrant that could conceivably compete on different value schemes versus entrenched competitive options. These competitive options consist of planes, trains and automobile, all of which offer either inferior speed to destination, higher associative costs, or both. More so, the highly disruptive aspects of the proposal derive from the opening of mass markets to travel options otherwise only available accept to a select few, namely travel at sonic, near-sonic, or super sonic speeds.

That said, too many question remain to deem the proposal a disruptive innovation. First, Musk states his busy schedule prevent him from pursuing the idea fully. That in itself calls in to question, at least in my mind, the economic viability of any future hyperloop. Second, a major determinant of any disruptive innovator or innovation revolves around the business model, corporate/ownership structure, the operating culture, and other important intangibles. With these important aspects uncertain, the hyperloop proposal looks like a potential disruptive innovation, but misses important qualities.

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